PLANNING COMMISSION, FIRST AND SECOND FIVE YEAR PLANS

PUBLISHED BY: SURENDER KUMAROCTOBER 25, 2012

PLANNING COMMISSION, FIRST AND SECOND FIVE YEAR PLANS

FIVE YEAR PLANS IN INDIA

Soon after independence, India faced many economic and political problems. The situation was not very stable due to the partition and the migration of refugees. Besides, there were severe food shortages and rising inflation. The government under PM Pt. Jawaharlal Nehru, inspired by the then Soviet Union model, decided to adopt the socialistic pattern of economic development and centralized planning. For this, a Planning Commission was constituted in 1951 by a government order. Notably, the Planning Commission is an extra-constitutional body, having sanction from the Cabinet. The Prime Minister is the ex-officio Chairman of the Commission while a Deputy Chairman is nominated separately.

The Planning Commission formulates the five-year plans in India, which are monitored and approved by the National development Council, comprising all Chief Ministers and the Prime Minister.

In fact, the model of planned development in India is much older. The Indian National Congress had appointed a National Planning Committee in 1938, which had brought out a draft plan for the first time for a free India.

FIRST FIVE-YEAR PLAN (1951-'56)

The Plan, launched in 1951, stressed on the rehabilitation of refugees, agricultural development and the control of inflation. The budget was allocated to seven broad areas:

FIRST FIVE YEAR PLAN - THE ALLOCATIONS

Agriculture and Community Development 17.4%

Irrigation and Energy 27.2%

Transport and Communication 24%

Industry 8.4%

Social Services 26.64 %

Land Rehabilitation 4.1%

Other Sectors and Services 2.5%

The realized growth rate was 3.6% against a target of 2.1%. The Plan was effective in securing the goal of food sufficiency for India.

SECOND FIVE YEAR PLAN (1956-61)

The Plan was conceived in the backdrop of economic stability. Inflation was now reasonably low and the farm growth targets of the First Plan had been achieved. The basic thrust of the Plan was on basic and heavy industries e.g. iron and steel, chemicals, heavy engineering and machine building industry to give a 'big push' to the economy.

The Plan was conceived by Pt. Nehru under the guidance of P C Mahalanobis, a renowned economist and statistician (founder of the Indian Statistical Institute, Kolkata). The Plan was based on the idea of Trickle Down hypothesis of economic growth i. e. the growth of big industries automatically leads to the growth of smaller ones and therefore, the fruits of growth reach the grassroots level.